Consumers Boost Spending on Hot Electronics in 2009, Despite Drop in Income

Despite an unprecedented decline in global per capita income in 2009, global revenue for hot electronic products increased for the year, reflecting a fundamental shift in how consumers are prioritizing their spending, according to iSuppli Corp.

Worldwide per capita income in 2009 declined by 2 percent to $10,500, marking the first annual decrease during the post-World War II era, according to US government data. In contrast, iSuppli estimates global revenue from shipments of smartphones rose by 9.6 percent for the year, while LCD TVs experienced a 14 percent increase and netbook PCs surged by a stunning 90 percent.

"There’s been a measurable shift in how consumers are spending their disposable income,” said Derek Lidow, President and chief executive officer of iSuppli. "In a time of great economic distress, when people had less money and spending on essentials like food and rent declined, consumers surprisingly used a disproportionate amount of their money to purchase new consumer electronics products.”

In terms of worldwide unit shipments, LCD TVs rose by 42 percent in 2009, while smartphone shipments increased by 13.2 percent in 2009 and netbooks rose by 100.8 percent.

"For global consumers, the latest electronic products have become top-priority spend items,” Lidow said. "They are willing to spend on these products at the expense of other desirables, such as jewelry, vacations and dining out. This trend will continue as the economic recovery gains momentum, causing global revenue for consumer electronic products to rise in 2010 and beyond.”

Global factory revenue from shipments of consumer electronics devices, a category that includes LCD TVs, will rise by 3.2 percent in 2010 and will grow by another 7.8 percent in 2011, iSuppli forecasts. The wireless communications segment, led by smartphones, will experience a robust rise of 10.8 percent in 2010, and a 13.1 percent increase in 2011.

The computer segment, partly driven by sales of popular netbook PCs, will rise by 7.8 percent in 2010 and 7.9 percent in 2011.

One major factor allowing consumers to increase their spending on certain electronic products is decreased expenditures on vacations.

"Rather than spending on travel, people are opting to take ‘staycations,’ where they stay home during their vacation time,” Lidow noted. "To make their staycations more enjoyable, consumers are buying products to entertain themselves in their homes, including LCD TVs.”

Other factors also augmented the strong spending on certain consumer electronics products in 2009. China’s stimulus efforts helped promote spending on various consumer products in the nation, most notably on LCD TVs.
Consumer connectedness is another trend that the global economy could not deter. Consumers around the world have been increasing their spend, in spite of the economy, on devices that enable them to be connected to the internet as they move from place to place. Consumers in the developing world spent a larger share of their income on becoming first-time cellphone subscribers.

"The importance that consumers are placing on these electronic products when it comes to spending is very positive development for the global technology industry and should be a cause of optimism in the years to come,” Lidow observed.

www.isuppli.com